| Wed 26 Nov 2014, 17:40 | | TRADEHOLD LIMITED - Announcement regarding a property transaction and withdrawal of cautionary |
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TDH 201411260061A
Announcement regarding a property transaction and withdrawal of cautionary
TRADEHOLD LIMITED
(Registration number: 1970/009054/06)
(“Tradehold” or “the Company”)
Incorporated in the Republic of South Africa
JSE Share code: TDH ISIN: ZAE000152658
ANNOUNCEMENT REGARDING A PROPERTY TRANSACTION ENTERED INTO BY TRADEHOLD AND WITHDRAWAL OF
CAUTIONARY ANNOUNCEMENT
1 Introduction
Further to the cautionary announcement published on 10 June 2014 and the further
announcements of 17 July 2014 and 28 August 2014 regarding the Memorandum of
Understanding (“MOU”) entered into between Tradehold Limited (“Tradehold”) and Collins
Property Projects Proprietary Limited (“Collins”) on 16 June 2014 in terms of which
Tradehold and Collins agreed, subject to the conclusion of final detailed agreements, that (1)
Tradehold will acquire a portfolio (the “Portfolio”) of commercial property assets in Botswana,
Zambia, Namibia, Mozambique and the United Kingdom (the “Properties”) from Collins and
its affiliates, and (2) Collins and its affiliates will use the proceeds of such disposal to
subscribe for ordinary shares (“Tradehold Shares”) in Tradehold (all of the preceding
hereinafter collectively referred to as the “Transaction”), Tradehold is pleased to announce
that the legal structure of the Transaction has now been finalised, and final versions of the
legal agreements setting out the detailed transaction steps have been prepared and
approved by Tradehold's board of directors (the “Transaction Agreements”).
2 Particulars of the transaction
The effective date of the Transaction is 11 June 2014, being the date on which the parties
agreed to the matters set out in the MOU, and the completion date of each Transaction
Agreement is the first day of the calendar month following the calendar month during which
the conditions precedent to that Transaction Agreement is fulfilled, which is expected to be
around 1 March 2015 for most of the Transaction Agreements.
The Transaction Agreements comprise:
- various sale of shares agreements (the “Sale Agreements”) in terms of which 100%
held subsidiaries of Tradehold (the “Tradehold Subsidiaries”) will acquire property
owning companies (the “Property SPVs”) with property interests in, respectively,
Botswana, Zambia, Namibia, Mozambique and the United Kingdom from affiliates of
Collins (the “Sellers”);
- corresponding subscription agreements (the “Subscription Agreements”) in terms of
which affiliates of the Sellers (the “Subscribers”) will subscribe for Tradehold Shares;
and
- in respect of Namibia, an additional agreement (the “Pipeline Agreement”) in terms of
which Safcoll Property Holdings (Proprietary) Limited, one of the Property SPVs to be
acquired pursuant to the Transaction, will acquire the rights to obtain interests in certain
pipeline property development projects of Collins and its affiliates.
The salient terms of the Transaction Agreements may be summarised as follows:
- the Properties will be acquired through the purchase by the Tradehold Subsidiaries of
all the ordinary shares and shareholder claims held by the Sellers in the respective
Property SPVs;
- the purchase price payable by the Tradehold Subsidiaries for the acquisition of the
Property SPVs will be the net asset value of each Property SPV; and
- the sale proceeds will be applied by the Sellers to enable the Subscribers to subscribe
for Tradehold Shares.
The Transaction Agreements are subject to a number of conditions precedent, principal
amongst which are:
- the acquisition of the Property SPVs in the various jurisdictions being approved by local
regulatory authorities, including the competition regulators in Namibia, Botswana and
Zambia;
- where third party debt is in place for a specific Property, the consent of the relevant
lender to the change in control in the relevant Property SPV;
- the restructuring by Collins of the holding companies of the Zambian and Botswana
Property SPVs;
- Tradehold obtaining finance, and any exchange control approval required, for the
Transaction on terms acceptable to it;
- the JSE Limited (“JSE”) approving the subscription by the Subscribers for Tradehold
Shares; and
- in respect of only the Pipeline Agreement, Tradehold obtaining all necessary approvals
in terms of the JSE Listings Requirements.
The Sellers have provided extensive warranties and indemnities in respect of each
Project SPV which are usual for transactions of this nature.
3 Sellers and Tradehold Subsidiaries
The following table sets out the names of the Tradehold Subsidiaries and Sellers in each
applicable country:
Country Tradehold Subsidiary Seller
Botswana Tradehold Collins JV Buckholm Limited
Limited (“Tradehold JV”) (“Buckholm”)
Arnewood Properties
Limited (“Arnewood”)
Namibia Tradegro Holdings Africol Property
Proprietary Limited Investments Proprietary
Limited;
Safland Investment
Holdings (Proprietary)
Limited
Zambia Tradehold JV Buckholm
Barbute Limited
Sandrock Management
Limited
Arnewood
Mozambique TC Mozambique Properties Prince Imperial Proprietary
Limited Limited
JR Knysna Hollow Resort
Proprietary Limited
United Kingdom River Street Properties Collins International
Limited Limited
Du Preez Limited
4 Consideration
The consideration payable by Tradehold for the Properties (the “Consideration”) is £22.3
million, which is the estimated net asset value (the “Net Asset Value”) of the Property SPVs
(and, accordingly, the Properties being acquired). The Net Asset Value has been calculated
based on the projected net income before interest and taxation for the twelve months ending
28 February 2015 of each Property SPV, capitalisation rates ranging between 8% and 11%,
and after deducting third party debt of each Property SPV (if any). The valuations are
underwritten by the Sellers, and the final Consideration will furthermore be dependent on
valuations to be performed on each Property, at Tradehold’s request, by an independent
registered valuer, provided that, save for certain Properties located in Zambia and United
Kingdom, there will be no upward adjustment to the Consideration if the value of a Property
exceeds the estimated value thereof in the relevant Sale Agreement.
The Purchasers will pay the Consideration in cash on the completion date of each Sale
Agreement, which cash will be utilised by the Sellers to enable the Subscribers to subscribe
for shares in Tradehold in terms of the Share Issue (defined below).
5 Issue of Shares
The Sellers will apply the proceeds of the consideration received from the various
Purchasers to enable the Subscribers to subscribe (the “Share Issue”) for up to 28,311,803
Tradehold Shares at R14.15 per Tradehold Share, being the 30 day volume-weighted
average trading price of Tradehold Shares on 11 June 2014, the effective date of the
Transaction.
Following the Share Issue, Tradehold will have an estimated total of 183,912,224 ordinary
shares in issue.
In terms of the Subscription Agreements, the Subscribers are not permitted to dispose of
more than 50% (fifty percent) of the Tradehold Shares subscribed for during a 5 year ‘lock-in’
period, and may only encumber the Tradehold Shares so subscribed for with the prior written
consent of Tradehold, which consent may not be unreasonably withheld or delayed.
6 Financial Effects of the Transaction
Based on Tradehold's interim financial results for the six months ended 31 August 2014, the
unaudited pro forma financial effects (“Financial Effects”) of the Transaction and the Share
Issue on Tradehold's earnings per share (“EPS”), headline earnings per share (“HEPS”),
diluted earnings per share (“DEPS”), diluted headline earnings per share (“DHEPS”), net
asset value per share (“NAV”) and net tangible asset value (“NTAV”) are set out below.
The Financial Effects are prepared for illustrative purposes only, and because of their nature,
may not give a fair presentation of Tradehold's financial position or the effect and impact of
the Transaction and the Share Issue. The Financial Effects are the responsibility of
Tradehold's board of directors.
Before the Adjustments 2 After the %
Transaction Transaction Change 4
and Share and Share
Issue 1 Issue 3
5
EPS (pence) 2.7 0.22 3.0 8%
5
DEPS (pence) 2.6 0.22 2.9 8%
5
HEPS (pence) 1.2 0.47 1.7 39%
5
DHEPS (pence) 1.2 0.46 1.6 39%
6
NAV (pence) 75.2 0.57 75.8 0.76%
6
NTAV (pence) 75.2 0.57 75.8 0.76%
Actual number of ordinary 155,600,421 28,311,803 183,912,224 18%
shares in issue
Diluted weighted average 149,517,946 28,844,259 178,362,204 19%
number of ordinary shares in
issue
Notes:
1. Based on Tradehold’s interim financial results for the six months ended 31 August 2014.
2. The “Adjustments” column reflects the pro forma adjustments in respect of the Transaction and
Share Issue.
3. The “After the Transaction and Share Issue” takes into account the impact of item 2 above.
4. The “% Change” column is measured as the “Adjustments” column as a percentage of the “Before
the Transaction and Share Issue” column.
5. In calculating the Financial Effects on EPS, DEPS, HEPS and DHEPS, it was assumed that the
Transaction and Share Issue was implemented on 1 March 2014 for purposes of the statement of
comprehensive income.
6. In calculating the Financial Effects on NAV and NTAV, it was assumed that the Transaction was
implemented on 31 August 2014 for statement of financial position purposes.
7 Description of Business and Rationale for the Transaction
The Property SPVs form part of the Collins group of companies, which is a fourth-generation
family-owned property development business which has built up an excellent track record in
the development and management of commercial properties across Southern Africa and
beyond.
The Transaction will result in Tradehold gaining access to the resources and property
expertise of the Collins group in Namibia, Botswana, Zambia and Mozambique. Following
the acquisition of the Portfolio certain Collins representatives will join the Tradehold business
to assist with the development of Tradehold's African portfolio.
Whilst the greater part of Tradehold’s property business will remain focused on the United
Kingdom, Tradehold intends to build up a significant property portfolio across Africa
(excluding South Africa).
8 Property information
The Properties have been valued by Collins at certain specific dates. Collins is not
independent nor registered as professional valuers. As indicated in paragraph 4 above, in
terms of the Transaction, Collins underwrites the value of each of the Properties and
Tradehold is entitled to obtain formal independent valuations for each Property by an
independent registered professional valuer prior to certain agreed dates.
9 Constitutional documents of Property SPVs
Tradehold confirms that it will ensure that the provisions of the constitutional documents of
the Property SPVs do not frustrate Tradehold in any way from compliance with its obligations
in terms of the JSE's Listings Requirements, and that nothing contained in such constitutional
documents shall relieve Tradehold from compliance with the Listings Requirements.
10 Categorisation
The Transaction is a category 2 transaction in terms of the JSE Listings Requirements.
11 Related party transaction
Certain of the counterparties under the Pipeline Agreement will, following completion of the
Transaction, become related parties, as defined in the JSE Listings Requirements, to
Tradehold and, accordingly, the implementation of the Pipeline Agreement will constitute a
related party transaction, as contemplated in section 10 of the JSE Listings Requirements,
which requires a fairness opinion from an independent professional expert acceptable to the
JSE that the terms of the transactions contemplated in the Pipeline Agreement are fair as far
as the shareholders of Tradehold are concerned, as well as shareholder approval. A circular
convening a general meeting of the shareholders of Tradehold to obtain such approval will
be posted to Tradehold shareholders in due course. Tradehold will also appoint an
independent expert to provide the requisite fairness opinion.
12 Withdrawal of Cautionary Announcement
The cautionary announcement and further cautionary announcements mentioned in
paragraph 1 above were in relation to the Transaction and are accordingly withdrawn.
Cape Town
26 November 2014
Sponsor
Bravura Capital Proprietary Limited
Attorneys
Cliffe Dekker Hofmeyr Inc.
Date: 26/11/2014 05:40:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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